Unprofitable DoorDash sees shares jump up to 92% in IPO

Shares of unprofitable food delivery platform DoorDash Inc. surged as much as 92 per cent in their trading debut Wednesday, in the latest sign of investor exuberance in what has already been a record year for IPOs.

DoorDash, which has seized on the pandemic-fuelled boom in demand for meals brought to your door, saw its shares climb as high as US$195.50 in New York after raising US$3.37 billion in its initial public offering. The first-day jump, which if it holds would be the third biggest this year, gives DoorDash a market capitalization of US$55 billion and a fully diluted value of US$66 billion — larger than companies including Kraft Heinz Co., Lululemon Athletica Inc. and Ford Motor Co.

Investors looked past concerns that competition from rivals such as Uber Technologies Inc. may heat up next year, just as the distribution of vaccines reduces the need for at-home dining. DoorDash’s surge also bodes well for companies such as Airbnb Inc. that are looking to add to the more than US$160 billion already raised by IPOs in 2020.

DoorDash’s shares opened at US$182 after the firm priced them at US$102 each. They ended the day at US$189.51, up 87.5 per cent.

The IPO is the third-largest on a U.S. exchange this year, exceeded only by the US$4-billion blank-cheque company backed by billionaire Bill Ackman and software maker Snowflake Inc.’s US$3.86-billion offering including so-called greenshoe shares.

DoorDash had 50 per cent of U.S. market share as of October, surging past UberEats, Grubhub and Postmates, according to its filing documents. That number is up from just 17 per cent in January 2018. DoorDash said there is also an opportunity for that market to expand, with fewer than six per cent of U.S. residents currently using it.